A London-based blockchain business is working with some of the world's biggest banks on new digital currency

Barclays, HSBC and Credit Suisse have all joined a new scheme by UBS that is looking to build a new digital currency for central banks.

The Utility Settlement Coin (USC) project is being run by UBS and London blockchain firm Clearmatics, and has already signed up some big name banks including BNY Mellon, Deutsche Bank, ICAP and Santander.

Initially focused on concept testing and exploration, the group will look at ways in which the proposed new digital cash could be used by central banks for payments and other back-office functions and could form the prelude to a full roll-out of a central bank digital currency.

The hype in financial circles around distributed ledger technology (DLT) has continued to grow, with institutions including The Bank of England and the London Stock Exchange experimenting with blockchain-based technology amid claims that banks and other financial firms could enjoy efficiency savings of up to 30% by utilising the tech.

Hyder Jaffrey, head of strategic investment & FinTech innovation at UBS Investment Bank, said: “Digital cash is a core component of a future financial market fabric based on blockchain technologies.

“There are several digital cash models being explored across the Street. The Utility Settlement Coin is focussed on facilitating a new model for digital central bank cash.”

Touching upon the wider potential for blockchain innovation, Robert Sams, founder and chief executive of Clearmatics Technologies, commented: “Cash is a leg to almost every trade, so this project is key to unlocking the benefits that the industry can gain from distributed automation technology in clearing, settlement and collateral management.”